As she heads towards a million on Kickstarter, Amanda Palmer explains where the money will go

Normally having someone talk you through a budget wouldn’t make for especially compelling reading, but when a DIY artist outlines the costs they are incurring releasing records, touring shows and keeping fans happy it’s usually a pretty interesting read, and the latest blog post from Amanda Palmer very much falls into that category.

Palmer, of course, recently launched a campaign on US-based crowd-sourcing website Kickstarter to raise money to fund a new album, art book and an ambitious tour, basically offering a wide range of packages to fans on a pre-order basis, so she can access now the cash required to make all that activity happen later in the year.

Such crowd sourcing by artists isn’t new, of course, with many other new and established acts working with platforms like Kickstarter, or music specific crowd sourcing services like Pledge, to generate cash now in return for providing fans with products or services down the line. But Palmer’s pre-order funded project is certainly one of the most ambitious.

Originally stating, at the start of 32 days of fundraising, that she’d need a minimum of $100,000 to make the project happen, that much was raised within hours and with a week to go her Kickstarter haul is currently standing at $817,055. With some reckoning she will break the million mark by the end of the month, one tweeter asked the former Dresden Dolls singer: “So, are you loaded?”

It’s a question that motivated Palmer’s budgeting blog, in which she explains how, actually, even if the million mark is passed by the end of her Kickstarter campaign, she will actually be lucky to pocket any more than $100,000 herself. And – given that any major project should probably allow 10% of contingency money for unforeseen expenditure – that could also be used up, so that Palmer will rely on the subsequent more conventional album and merchandise sales that the Kickstarter project ‘kick starts’ (via her website, at gigs and iTunes et al) to actually make a profit.

So, where will the million go? Well, she explains, it cost $250,000 to get to the point at which the Kickstarter campaign even went live, much of which was borrowed from friends and needs to be paid back (meaning if she had only raised the originally stated $100,000, the project would have made a loss). There are then costs in fulfilling the packages that have been sold via the Kickstarter initiative, and the more that are sold the more those costs go up.

Add the commissions that Kickstarter and Amazon take, the fees that need to be paid to the staff who help make everything happen, legal costs and any loss that might be made by the tour (that should break even, Palmer says, but she might have to take a hit if any shows don’t sell so well), and the million is soon gone.

The singer notes that she could save money by cutting corners with the products she sends to fans who have contributed to the million, but says she doesn’t want to, not least because if the products people pre-ordered on trust this time weren’t of a sufficiently high quality, people would be less likely to pre-order in that way in the future.

Of course traditionally all these upfront costs would be covered by a record label, which would then recoup the money it had spent through subsequent record sales (though without the flexibility to sell premium packages that incorporate live events, merchandise and related art).

Palmer stresses that she has always recognised that, in making that upfront investment, labels have traditionally played a crucial role in helping artists succeed, even if artist/label relationships were at times fraught, but adds that she hopes the direct-to-fan pre-order model enabled by Kickstarter and Pledge might offer an alternative to the label system for new artists and “major label refugees like me”. Which means, she says, this project will have been a huge success even if she only breaks even once all the bills are paid.

She writes: “[Because it will be] proof positive that [the traditional label system] is just not necessary any more. Paying now for value later is what historically would’ve been a label’s primary purpose. Now you are able to bankroll and finance and keep control with the artists. Showing that this works… that’s simply great art-karma, and awesome for everybody, including me. And all my art-making friends”.

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